Real Estate
August 18, 2018
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What you don’t hear from an internet mortgage lender

By: Scott Sheldon
June 1, 2018

Working with an internet lender may or may not be in your best interests. Whoever you hire to help with mortgage loan financing should be well-versed and experienced in mortgage financing. Here are three things you will never hear from an internet only lender….

If you don’t fit our programs, you probably will not be able to get a mortgage loan with us.

This is true and here’s why. The model of internet lenders is to originate as many loans as paper loans possible. Originating high volume means that they must be 100 percent focused on borrowers who have a 110 percent squeaky-clean financial scenario. In the complex mortgage world of 2018, even the cleanest borrowers with 800 credit scores and 50 percent down payments will go through some rigmarole when getting a mortgage as a byproduct of the market we are in.

Our loan qualifications are more restrictive than what Fannie Mae and Freddie Mac otherwise allows. 

It is also a fact it’s much easier for a mortgage lender for example to do a loan for a consumer with a 40 percent debt to income ratio than it is for a borrower to do a loan for a client who has a 51 percent debt to income ratio and they must lower the loan amount or pay off debt to qualify or do something to help the consumer fit the box.

You are my top priority. 

The reality of it is that online lenders in order to compete must operate a high turnover business which means helping a massive number of customers at one time. If you look at an online loan officer, they might have anywhere between 50 to 75 loans at any given point in time in their pipeline where as a loan officer who is more referral-based and or local might have 20 to 30 in their pipeline. The loan officer that has the lower pipeline more than likely has to support some operational personnel to give the type of service most borrowers would come to expect and want when refinancing or buying a home.

The truth is, every single loan can be made doable by changing income, credit, paying off debt, changing loan programs, putting more money down etc. You would be hard-pressed to find an internet lender who has the bandwidth and a desire to make an unworkable loan workable. There just isn’t motivation to do so when they have 75 other green loans to review in tandem.

Due to the inherent nature of their model an internet lender primarily is focused on doing as many loans as possible in the least amount of time as possible which means you spend your own time putting together your own mortgage loan program essentially originating your own mortgage with their resources.

If you have the time to spend procuring a mortgage in that fashion, working with an internet lender could be a viable choice; however if you’re looking to have your loan handled, where you know the net details and the net figures and everything else is 100 percent handled by the lender, a local lender who has the technology to make the process easier for you might be the more optimal route to consider taking on your next purchase or refinance.

 

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.